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State v. Larry's on Site Welding

Supreme Court of North Dakota

April 29, 2014

State of North Dakota By and Through Workforce Safety and Insurance, Appellant
Larry's On Site Welding, Appellee and William Snook, Respondent

Appeal from the District Court of Mountrail County, North Central Judicial District, the Honorable Richard L. Hagar, Judge.

Jacqueline S. Anderson, Special Assistant Attorney General, Fargo, ND, for appellant.

Stephen D. Little, Bismarck, ND, for appellee.

Gerald W. VandeWalle, C.J., Carol Ronning Kapsner, Lisa Fair McEvers, Daniel J. Crothers, Dale V. Sandstrom. Opinion of the Court by VandeWalle, Chief Justice.


Page 311

VandeWalle, Chief Justice.

[¶1] Workforce Safety and Insurance appealed from a district court judgment affirming an administrative law judge's order finding William Snook and other similarly situated welders were independent contractors. We affirm the judgment, concluding the ALJ's findings of fact are supported by a preponderance of the evidence and the conclusions of law are supported by the facts.


[¶2] In October 2010, Snook was injured when he fell off a ladder while working on an oil rig platform. Snook submitted a claim for injury form to WSI. WSI conducted an investigation to determine Snook's employment status with Larry's On Site Welding (" Larry's" ). Larry's did not have coverage with WSI. Snook reported to WSI that he worked for Larry's at the time of the injury. Larry Bumpous, the owner, claimed Snook was an independent contractor. WSI issued a notice of decision establishing employee status and

Page 312

accepting claim and awarding benefits. Larry's submitted a request for reconsideration. WSI entered an order finding Snook was injured in the course of employment. The WSI order directed that Snook was to receive worker's compensation benefits, and that Larry's was required to establish an account with WSI and pay premiums for its employees.

[¶3] Larry's filed a demand for a formal hearing. Following a hearing, the ALJ reversed the WSI order and determined that Snook and other similarly situated welders were independent contractors and not employees. The ALJ also made over thirty fact findings. Among the findings, the ALJ found that Larry's provided on location welding services to oil rigs in North Dakota. Bumpous, the owner, provided the welding services himself and through other welders. There are no written contracts between Larry's and the welders that worked with Larry's. According to the ALJ, each welder's amount and type of work was directed by the oil rig foreman upon the welder's arrival at the respective rig site.

[¶4] The ALJ also found that, each time Larry's provided welding services to the oil rigs, he was required to enter into a Master Service Agreement. The Master Service Agreement was required whether Bumpous provided welding services himself or through others. According to the ALJ, " Larry's provides the umbrella insurance coverage required by the MSAs and is on the vendor's list for several drilling companies. Individuals seeking to work on the rigs must either be on the vendor's list or go through Larry's or other similarly situated businesses."

[¶5] Larry's paid the welders at an hourly rate. The ALJ found that the welder's time sheets showed their work with Larry's was sporadic. Workers were paid each week based on their hourly billings from the previous week. According to the ALJ, " Mr. Bumpus [sic] is able to do this because he uses a factoring company and absorbs the 1.5% cost of the money he receives. If the workers contracted directly with the rigs they might have to wait up to 120 days to be paid." Larry's generally received $95 per hour for services performed, and paid the welders $30 less per hour. The ALJ found it is more cost effective to have subcontractors than employees because of high turnover, and that welders " bounce around a lot from vendor to vendor and from state to state."

[¶6] The ALJ found that safety meetings were not conducted or required by Larry's, but were held by the " tool pusher or the company man and were held at the rigs." Welders working with Larry's paid for their own travel costs, lodging expenses and equipment. The ALJ found, " The workers provide their own supplies and they have their own equipment, tools and vehicles. Mr. Bumpus can discharge them at any time and they can quit at any time."

[¶7] Although Bumpous stated he did not train individuals, the ALJ found Bumpous did teach one individual how to weld and also provided advice to other welders. The ALJ found Bumpous did not direct workers how to do their jobs. According to the ALJ, the " tool pusher" at the rig directed the welders. " [Bumpous's] workers report after the rig pusher determines the job is completed and signs off on their work invoice. [The welders] ...

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